Importance of Saving Money Post Covid-19
It’s no secret that the Covid-19 pandemic has caused major lockdowns across the world. People have been unable to travel abroad, go out for drinks or eat out in restaurants with friends and family.
This massive restriction on daily living has helped many people build their savings. Last year, in total, households put away almost three times as much money as the year before, according to an analysis of Bank of England figures by the investment firm Hargreaves Lansdown. It found that in the year to March 2021, £184bn flowed into savings accounts.
We all know how expensive it can be to live these days – especially when you want everything your heart desires! From clothes shopping sprees to new gadgets – there is always something tempting on offer at every turn. But now more than ever, we are feeling the pinch financially. So any chance to reduce our expenses is a positive move in the right direction.
While Covid-19 may not end today or even next year, we will get there at some point in time. And when we do, it’s a good idea to have money saved for the time when we can live life to the full again. But we should also learn from the lessons lockdown has taught us about building a healthy savings supply.
Why Saving Money is Important
We need to understand the importance of saving money and why we should do it. Many of us don’t know why spending should be curbed and why saving should increase in place of that.
Not saving money could mean our expenditure is more than our income at some point. The money you can spend now will be required at a future point of time in different forms:
A need arises; emergency funds: To meet an urgent or an unexpected expense like paying for a car repair or gas boiler has broken.
A desire arises; To fulfil a desire or want of some sort like buying new clothes for the kids or getting a small gift for your wife.
An opportunity arises: An opportunity comes your way which you cannot afford to lose out on and therefore require money even if it means dipping into your ’emergency’ funds.
A commitment arises; long-term savings: To save money which will be required in the future. For instance, to take up a big project at work or buy property for your family.
In summary, there will always be situations where you need additional money on top of your income. By saving money, you are planning for most eventualities.
Ways You Can Continue to Save Money Post Covid
We have already said that the pandemic has been a time for saving additional income for many. However, you might be wondering how you can enjoy your freedom as lockdown has eased but continue to save money.
Here are some tips for doing precisely that!
1. Set up a regular saving habit:
You can start by setting up a simple plan in your mind that you will be making savings every month for different goals. Once you do this, it becomes much easier to follow through for the rest of the year.
With digital banks like Starling Bank, you can easily create a saving space and automatically rounding up your transactions. This will mean that as you start to go out and spend money again in the pub or cinema, you continue to save money each time!
2. Cut down on nonessential spending
Not many people realise that you can save a lot by cutting down on your extraneous expenditure. For example, suppose you stop eating out and start eating at home. In that case, the money you will be saving is astronomical in value. You may have developed some new talents in lockdown, like at home cooking. Do start going out again but save money by doing it in moderation.
3. Learn to delay our needed gratification
Sometimes, people are compelled to make purchases because of an immediate need or craving something they see in a shop window. This is where self-control comes in handy. Learn to resist that temptation and delay your need for gratification for a specific period.
For example, if you are yearning for some new shoes, you can tell yourself the following; ‘I will look at it after one month’. By doing this, you will be able to curb your spending to a large extent. Put the money you would spend on the shoes in a savings account you can easily access in a month.
In a month, You will often find you are not bothered about the purchase and therefore have saved yourself some money.
4. Lock in some of your Savings to Keep your savings
Financial institutions also offer some attractive schemes on their savings accounts. The best way is to go for this option so that you can get good returns over there. For example, if the interest rate of your current saving account or any other bank you are using is just 2%, then instead of withdrawing the money and spending it, you can choose to keep that money in your account.
5. Learn to Entertain Yourself:
Entertainment doesn’t mean going out with friends or family for dinner and a movie every time they call you. People can get enjoyment from watching a good movie at home or reading some good books. So, learn to have more fun at home, which will help you save money.
6. Start a Post Covid Budget:
So far, you have saved money without having to budget. Now shops have reopened, and we can eat out again there is more temptation to spend money.
Set up a monthly budget to allow yourself to have fun but still allow for savings.
Go on, start saving now!
We all have a desire to make our future secure, whether we want security against unexpected expenses, want of some kind or need money for something fundamental. If you save your hard-earned money wisely, then it will be of great help to you in the future.
So, if you have any goal that you want to achieve in the future, start saving money for it now and make your dream a reality. Also, remember that once you save some money, you can only think about spending it on something else.
Importance of Saving Money Post Covid-19: Final Words
Saving money post-Covid-19 is crucial because it can provide you with a sense of security and peace of mind. As the world changes, so do your need for savings.
With more people saving during a covid-19 pandemic, there are now many opportunities to save in different ways – from cutting down on nonessential spending to saving as you start to spend again!
If you haven’t started yet, then what are you waiting for? Start saving today!
Mary Elizabeth is the founder of MeMoreMoney.com, a Personal Finance website that helps people make their money work harder. She is a self-taught finance nerd and featured Personal Finance Expert in GO Banking Rates and Yahoo! Finance.